Boulder-based Rally Software shares slide after 1Q revenue misses

Shares of Boulder-based Rally Software Development Corp. sunk by more than 20 percent in after-hours trading after the software services firm's first-quarter revenue was below expectations.

During the quarter that ended on April 30, Rally's first quarter of its 2015 fiscal year, Rally lost $8.48 million, or 34 cents per share, on revenue of $19.43 million. In the year-ago quarter, Rally posted a loss of $5.79 million, or 98 cents per share, on revenue of $16.05 million.

Analysts polled by Thomson One Analytics expected a loss of $12.34 million, or 56 cents per share, and revenue of $19.61.

The first quarter was “mixed in performance,” Rally CEO Tim Miller said in a statement accompanying the earnings.

“We continued our success in selling our solution to the large enterprise buyer and clearly enjoyed support from our largest customers. For example, the 7,000 seat upgrade order we enjoyed from one of our top 15 customers — now at 12,000 seats under contract — underscores this aspect of our business,” Miller said, noting a user-base metric for a specific customer.

“We struggled slightly in selling new seats to new customers, which was due largely to fast growth in quota carrying headcount that caused some execution delay as these new team members trained and learned about their new territories and Rally Software's business.”

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Rally's guidance of a net loss of 45 cents to 48 cents per share for the second quarter is in line with analyst expectations of a 49-cent-per-share loss. Revenue projections of $20.2 million to $20.8 million are below analyst expectations of $22.46 million, as reported by Thomson One Analytics.

Shares of Rally (NYSE: RALY) closed at $12.22, down 14 cents, on Thursday. In trading following the after-market earnings release, shares dropped $2.47, or 20.2 percent, to $9.75.

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